Buying A Home

Buying a home in today’s market here in Lincoln, Neb. is much different than it was even a year or two ago, let alone for past generations. With a disproportionate amount of buyers versus sellers, composed of more of the former and less of the latter, it’s not uncommon for homes to be sold within hours of listing, if not before even being officially listed on the market. It’s a climate that necessitates buyers being ready to act fast, with less room for negotiating and higher chances they’ll be the party paying for closing costs and other fees associated with the home buying process. Although it is a seller’s market in most all cases locally, luckily for buyers, interest rates remain historically low. Sure, it can be a little scary to make such a big decision so fast, but it’s still well worth making the investment.

Representation: Your Agent

As a general rule independent of the market conditions, but especially with what’s happening currently, it’s critical to be represented by an experienced real estate agent.

“Inventory is very low, and the number of buyers is high, which has created a seller’s market,” confirms Ben Bleicher with Woods Bros Realty. “This makes for a situation that isn’t ideal for all buyers as houses are going for a premium.

That being said, buying a home is a much better investment than renting for a lot of reasons. The biggest is to build equity. Then there’s independence and freedom to renovate. Most landlords won’t allow tenants to do whatever they want to a home, nor do most tenants want to invest in a property they don’t own. As a homeowner, you’re free to add that landscaping you’ve been wanting, paint your bedrooms any color you want, and renovate the place to your liking. The best thing about modifying your house is if you do the right renovations, you’ll benefit financially when you sell because it will be worth more money!

Even with the current market being what it is, there are ways to successfully get the home you want without overpaying. Some of these are trade secrets, but what I can say is there are methods for finding properties that are not yet listed and negotiating fair prices on listings that are already active. It’s quite a compelling reason to work with an experienced and connected real estate agent.”

Pointing out more reasons beyond that, he continues, “The benefits to having an agent are vast; another important one being the fact that buyer’s agency doesn’t cost the buyer a dime. You get a real estate agent’s expertise and the sellers pay for our services on the buyer’s behalf; it’s already factored into their expenses and there’s nothing required of the buyer to take advantage. Furthermore, we agents have knowledge about homes that most consumers do not possess. It’s wise to work with an agent who will protect your best interests as the buyer.

For example, condition of the high dollar items is very important. The main exterior components to assess are the roof, windows, siding, and gutters. Mechanical-wise, the age and condition of the furnace and A/C systems are extremely important because either can set you back thousands if replacement or repair is needed. As for the interior, the foundation floor and walls are the most important. If either is in poor condition it can cost a homeowner anywhere from a few hundred to tens of thousands to repair or add drain tile systems. If all of these are solid, finishes do matter, but don’t have to be deal-breakers. Updating a home can be very expensive, but adding better finishes does indeed add value to a home, whereas maintenance fixes don’t always.

I help clients get pre-approved (the most important first step), and then we search for houses that fit their wants and needs. Once we’ve identified a house they like, I make sure that the property is in good shape and run comps to see if the price was set correctly.”

In agreement on the importance of working with an experienced real estate agent on either side of the transaction, Derek Kats with Keller Williams Lincoln elaborates, “People often assume they can easily buy a home without the use of a licensed real estate professional. When making one of, if not the biggest purchase decision of your life, it seems rather unwise to go it alone, especially when a buyer’s agent is customarily free to use.

On the flipside, when sellers decide to go the ‘For Sale By Owner’ route, they typically cannot sell the home for as high of a price nor understand how to avoid the numerous pitfalls of a contingency-laden buyer contract.

Working with a professional realtor is critical as such an expert will assist in identifying many points in the market. A professional will discuss needs with the client and classify what’s most important, along with introducing numerous ideas relating to what is in a specific area locally in relationship to those.

Home buyers must be aware of what they need in their homes, not only now but also well into the future. Moreover, they have to understand the desires they have for their homes versus what they know they will need. This includes points relating to starting a family or operating a business, particularly a business based out of one’s home. The potential for growth in many aspects of one’s life will make a difference in terms of making a decision. Thus, it is sensible to look at what may come about in the future and what is needed for a home to qualify as suitable.

A realtor can also identify many points relating to one’s credit, thereby looking exclusively into homes one can afford. This ensures a better sense of control over the process of finding a quality home.

Buying a home should entail understanding one’s limits. An ethical realtor should help with identifying what is right with regards to one’s credit rating and how that will determine what is affordable and advised any particular situation. I feel it is critical, and my responsibility as a professional, to explain how buying a home involves limits on what one can afford at a given time. This includes educating my clients on how much money is involved in not only a home loan, but also regular maintenance and other costs. The potential for the home’s value to increase can be discussed too, but that is not necessarily a requirement.

The general growth in home values is appealing, but the recent slowdown in available home rates is important to look at in comparison. Such a slowdown makes it harder for people to find homes. This may also cause some homes to become more valuable as such resources become increasingly scarce on the market based on supply and demand alone.

A realtor will help you understand the factors at play in the market, identifying strengths and weaknesses as they come about. This is done to evaluate what issues have to be observed in the market in general and what must be addressed when finding a home one can afford, but that will also best maintain its value so that you’re making a wise investment.”

Tessa Warner with Woods Bros Realty further emphasizes, “It’s very important to have a great team of industry professionals working with you! In addition to choosing a knowledgeable real estate agent that will help find you a home you love and guide you to a successful close, select a mortgage lender that will educate you and empower you to make a smart investment, as well as advocate for your needs. It’s important to understand the types of loans available to you, how your credit score is determined, and how your financial decisions will impact buying a home and building wealth through home ownership.

Your realtor is your first line of defense in making sure that the house you love is a good investment, and is your biggest and best advocate throughout the process. That means we listen to your needs and concentrate on finding the most functional and affordable home for you. We also connect you to other trusted industry professionals, such as mortgage lenders, home inspectors, electricians, plumbers, and any and all other professionals that might be needed to ensure you are educated and empowered to make the best decisions throughout the home buying process. Real estate agents also act as walking dictionaries who help translate all the industry jargon and help you understand how the various steps in the process will affect you now and in the future.”

She also offers the following advice to potential home buyers who are concerned about the current market. “It can be overwhelming to try and keep up with everything that affects the housing market, so ask your real estate agent what changes are going to directly impact you and your buying process. Then, educate yourself from there. In general, it’s important to be informed on interest rates and local market conditions, since most price points and neighborhoods vary greatly in what you can get for your investment. If you are considering a government-backed loan, ask your real estate agent where to find the most up-to-date information on legislation that could potentially impact your ability to qualify for that loan. Never be afraid to reach out to government officials locally and nationally to let them know how their decisions are affecting your ability to buy a new home.

It’s easy to get caught up in the story about how your co-worker sold her house in under an hour or how your relative paid $10,000 under market value for a house that sat for months, and then assume that your journey will take the same path. Take a deep dive into your local market conditions and then understand that everyone’s process is going to be different. For example, it might be a seller’s market in some price points and neighborhoods, but a buyer’s market in others. Talk at length with your real estate agent about the market value of homes you are interested in buying, and then take the steps you are comfortable with to put yourself in the best position to purchase the home you decide you’d like to buy.

Most buyers start the process by looking online or wandering into an open house. However, the first step you should take is finding the right real estate agent for you, and then meeting with a trusted mortgage lender to find out what financing you qualify for. That will give you the security of knowing that when you find the right house for you, you are able to act quickly and confidently.”

Sandra Larsen with BancWise Realty also weighs in on financial considerations, offering the following advice:

“The most important factor to consider when getting ready to buy a home is the financing. Buyers put themselves in the most favorable position when they connect with a great local lender who can get them preapproved. To mitigate risk, this is one thing buyers can proactively do ahead of time that will make a big difference.

Most of us are not carrying around $100,000 – $1,000,000 in cash, so taking out a mortgage is the other option. Be prepared to breathe deep and be patient with the process. If you don’t already have a lender selected, seek a reliable, trustworthy referral from your Realtor®. Do be aware that most experienced Realtors® will ask the buyer to obtain preapproval before looking at homes. Here’s why: Let’s say you go shopping for a home and you fall in love…now what? You’ve put yourself on an emotional roller coaster of loving the home but not being able to offer on it because you’re not preapproved and you have a house to sell. Home after home comes on the market and then sells and in the meantime, you tour more homes, fall in love again, it sells and this keeps happening over and over. We as Realtors® care about our clients and this is not something we want you to experience. We want the process to be as smooth and as simple as possible so you’re able to enjoy what is supposed to be a good thing! When done in the right order, it’s super fun and exciting.

It is also better when the loan underwriting process is local, accessible, has reasonable terms, and can adapt quickly, because the federal regulations lenders have to abide by now are very cumbersome and time-consuming. Not to mention funny little unexpected requirements just pop up at the last minute. Be prepared to respond to your lender quickly when they request information. There are many good local lenders, but it’s best to know the person who’s helping you with the most important purchase in your life. Choose to work with someone you’ve met with in person, who can explain all of the different loan products and find one that’s best for you.

Your lender will also probably share with you Rule # 1 once you’re in serious house-buying mode, and especially once you’re under contract to buy a house: ‘Do not use your credit for anything; don’t do anything out of the ordinary financially without talking to me (your lender) first to make sure it won’t affect the loan process. Don’t go buy a new car or new furniture or run up a $7,500 vacation on your Visa. Wait until the house closes.’

Going back to the importance of preapproval, in the current market conditions, most sellers won’t sign off on your offer without it. It’s a reasonable expectation to demonstrate to a seller how you’re going to pay for the home, right? As it stands now, most sellers in this market don’t need to accept an offer that is contingent upon your house selling either. There’s likely another buyer for that home who doesn’t have a house to sell. It’s a seller’s market for the most part in Lincoln these days. Making low-ball offers and asking for closing costs is, most of the time, not the best strategy to get the result you want, which is to buy the home you love. If you love it, other people probably do too. It is competitive out there but now is still a great time to buy a home. Rates continue to stay low and relatively speaking, Lincoln’s home prices are reasonable compared to national averages. Please discuss your particular scenario with a caring and competent Realtor® who can guide you through the entire process. We are here to help you make smart, educated decisions and navigate through inevitable setbacks and any issues that arise. We’ll do it with a calm demeanor and offer sound advice for solving problems along the way.”

She concludes, “A key advantage of trusting a Realtor® when buying a home is simply experience. I am involved in buying and selling homes every day, while most folks will do it two to three times in their entire lives. Every endeavor has a standard process or professional protocol that takes place whether it’s planning a vacation, lighting a stage for a performance, catching a fish, or painting a house. Experienced practitioners in any profession complete the needed tasks to get from Point A to Point B better than one who does not practice that profession daily. Realtors® have had hours and hours of training, practice, and sheer repetition. Your Realtor® has toured hundreds and hundreds of homes in different price ranges and with different condition issues. We’ve processed many, many transactions. We’ve seen what happens when it’s not done right and unfortunately, what the sad consequences are as a result. Ultimately you’ll be so glad you took the step to trust a professional who will be with you from start to finish.”

Financing: Your Mortgage

As you’ve already heard from our real estate professionals, it’s important to get preapproved and establish a relationship with a local lender for optimal results. There are also other financial considerations, of course, but it’s an excellent starting point.

“The pre-qualification process will benefit a potential home buyer in multiple ways,” explains Mike Barrett with Cornhusker Bank. “The home buyer will be educated on the different mortgage products the bank offers. As lenders, we assist in matching up the right type mortgage with each customer’s situation. Home buyers will find out the amount of the house payment they can afford and the price range in which they should be looking. We will also inform the home buyer of any potential setbacks which could take place during the process. This helps ensure no surprises come up at the last minute. The entire home buying process can move seamlessly when the buyer has all the necessary information upfront.

Many homebuyers think they have to have a 20% down payment in order to qualify, which is not the case. Conventional loan programs go with as little as 3% down based on income guidelines. For prequalification (also referred to as preapproval), the potential home buyer typically needs to bring in current paystubs, W-2’s, tax returns and asset account statements.

Interest rates are still very attractive, with 30-year rates in the low 4% range and 15-year rates in the 3.375% range.

In the current housing market homes are moving extremely fast. The housing inventory is at an all-time low and buyers need to act fast in order to get the home they want. My best advice to help navigate the current market would be to talk to your loan officer before going out house shopping. It is more important than ever before to have your prequalification letter in hand when you are shopping for a home. You need to be able to act fast when you find the house of your dreams.

Cornhusker Bank has an experienced team of loan officers; we pride ourselves on customer service and helping the customers through every step of the process. The loan officers are involved with the customer from the prequalification process through closing, educating and guiding the customers through the entire process. Even after a loan closes, lenders are still there to assist every customer. We also offer local servicing. This aspect really sets us apart from the competition and gives our customers peace of mind.”

Offer: Your Inspection

Once your offer has been accepted (EXCITING!), you’ll proceed through the following steps: formal loan application, appraisal, and inspection, get your funds accessible, obtain homeowner’s insurance, final walkthrough, and ultimately, closing.

Regarding the inspection process, Randy King with King’s Home Inspections, an InterNACHI Certified Master Inspector who has been in business for over 19 years, and during which time has inspected over 8,000 homes, goes into depth about what you can expect:

“One important part of buying a home is having a professional home inspection done prior to purchase. This is usually done as part of the negotiation phase during the purchase process.

Schedule your home inspection as soon as possible after getting your offer accepted; usually, home inspectors are in high demand and booked out several weeks.

Most home inspection companies offer something called a ‘Whole House Inspection,’ which is a comprehensive review of all aspects of your home. This includes electrical, plumbing, HVAC, structural, interior and exterior finish, roofing, grounds and landscaping. These range from $400 to $600 depending on the size of the house, price, the number of major systems, etc. And it varies company to company.

A home inspector is a generalist by nature, and a home inspection is a thorough review of all these areas.

An inspection can discover defects or issues with a home that the buyer (and many times the seller) is not aware of, and as a result, these issues can be dealt with prior to purchase. Additionally, other inspections such as termite, radon testing, mold, lead paint, and asbestos may be requested as the need arises.

When choosing a home inspector, look for one who has years of experience and credentialing with a national association, such as International Association of Certified Home Inspectors (InterNACHI), American Society of Home Inspectors (ASHI) or National Association of Home Inspectors (NAHI). Also, look at the education and experience of the inspector. If possible, select one who is certified or a Master Inspector (meaning years of education and experience).

Remember, while a home inspection is comprehensive, it is not invasive. This means your inspector will review readily accessible areas of a home, but will not dismantle water pipes to look at the insides, video scope a sewer line, look behind walls, water test a furnace’s heat exchanger, or any other invasive, exhaustive analysis of parts of the home. Those types of inspections are specialized and far beyond what a home inspector does. The home inspector often will refer you to a specialist for further evaluation if a component is suspect.

Also, a home inspection is not a guarantee that nothing will go wrong with your house; you can purchase a home warranty to help cover things that may break or go bad. These are usually for one year and can be renewed. Ask your Realtor or representative at your title company for more information on home warranties. On older homes or ones with equipment over 20 years old, they are often a very wise investment.

Components in a house have a lifespan. Your home inspector can identify age of components and help you formulate a game plan on when to plan to remodel, replace, or upgrade components such as shingles, a water heater, an HVAC system, etc. This is important, especially if major systems have to be upgraded in the first few years of ownership, as it helps the buyers to know what major expenses they may be facing on a particular house.”

Relocating: Your Mover

A recurring theme about buying a home is it’s very exciting but tends to be a bit stressful at times. Moving is another one of those things that falls into this category. It’s a lot of work and can be a real pain, but something that must be done – we’ve all been there. The great news is that there are some things that you can do to make the transition as smooth as possible, though, which is the goal.

“Start packing early,” advises Lee Saltzgaber with Heartland Moving. “Packing and moving are time-consuming, and there is always more work than first anticipated. Be honest with yourself about how much you want to do yourself and what you want to hire someone to do for you.

For those who will be utilizing a professional moving service, always get an in-home estimate that can be explained and makes sense. This allows a professional to guide you on how to prepare, how soon to get started, and what will need to happen in order to meet your deadlines. One of the biggest mistakes that we see is that customers start preparing too late and struggle to get caught up when it’s go time.

By getting as much packing as possible done early, it will make the end process much more manageable. If you are packing yourself, the goal is to pack anything that isn’t furniture in a box. The more stackable items are, the more efficient your mover can be, and thus, the less it will cost you.”

To-Do List: Your Resources

Congratulations, you’re a new homeowner! Now what? Generally, when one buys a home, there’s a vision for the future and it’s full of possibilities. This almost always includes things to do in the first few months, but can also include a long-term plan for upgrades down the line or items that need to be done ASAP.

You’re starting out with completely new spaces in your home that can be transformed in just about any way you like – living and entertaining areas, kitchen and dining areas, bedrooms and bathrooms, landscaping and outdoor spaces, and so on. That can be a little intimidating, and if you don’t quite know where to begin, a consultation with an interior designer for the inside and a landscaping professional for the outside is a great place to start.

There are many instances when as a part of the agreement between buyer and seller, funds are provided for the new homeowner to allocate to repairs or updates that are deemed necessary. The most common of these are flooring, windows, roofing, major systems and appliances, and unfinished basements.

There will be the jobs that are done by the professionals and then the do-it-yourself jobs that you can take pride in completing. The most popular DIY projects for new homeowners are painting, replacing fixtures, and sprucing up curb appeal, but depending on your skill set, this can really be whatever inspires you at your local home improvement store.

For the property’s exterior, it’s highly recommended to take a trip to Outdoor Solutions and stroll through everything Lincoln’s landscape headquarters has to offer. This includes an impressive assortment of decorative landscape rock, flagstones, boulders, mulches, topsoil, retaining wall, pavers and construction materials. Then, enter the spacious storefront, and inside you’ll find outdoor pottery, garden products, pond supplies, patio furniture, and much more. So whether you’re going for an entire upgrade or just accessorizing your new digs, there’s plenty of inspiration to be found and variety from which to make your selections. You can pick up what you need and be on your way, or have it delivered right to your doorstep.

For those who are considering buying a home, now is a great time to do so. Home ownership, and being able to call a place your own, is fulfilling to say the least, and residential properties remain a wise investment. Or, perhaps it’s in order to accommodate a growing family, to be in a better location, to downsize upon retirement, or any other number of reasons tied to major life changes. Regardless of the circumstances, if you let the local professionals come alongside and guide you through the process, you’ll be amazed at how much it’s simplified and easier to navigate. By doing your research and selecting those you will work with carefully, you’ll be in an ideal position to get the most out of what you’re putting in. The perfect home is out there, and making it yours starts with reaching out to the right local professionals!